I was talking to an acquaintance recently who harbors serious doubts about capitalism. So much doubt that she can’t imagine any positive human characteristic that can survive contact with the corrupting touch of big business. I said to her that the scaffolding of capitalism is trust. She scoffed.
No one understands the limits of capitalism better than a long-time capitalist, and maybe someday we’ll be smart enough to create a better way to allocate capital than the invisible hand. Until then, I think that our basic human impulse to be true to our word is what makes our economy possible.
Most contracts in the business world are for a much lower dollar amount than the legal cost would be to enforce them. If you do business with someone who’s not trustworthy, you’ll eventually get stiffed. When you do, there’s not a financially rational response other than to grin and bear it. And not do business with that person again.
Given this, it gives me faith in human nature to observe how infrequently people renege on contracts. The only explanation, imho, is that most people are basically trustworthy. The few that aren’t, that consider their financial gain more important than their good name, should be avoided , no matter what they promise you.